Investing in talent: a commonly missed opportunity
Companies at all stages of their climate journey should consider how to harness employee value to support sustainability initiatives. Talent is a key area for this: 35% of all companies surveyed say difficulty retaining or upskilling talent on climate change is a top internal barrier to doing more on climate change, and 28% say difficulty hiring talent with climate change skills is a key external barrier.
Yet it does not appear to be a priority area for investment. Only 23% of survey respondents list human resources and talent as one of their top three climate investments. Additionally, just 27% completed plans to hire or upskill talent to acquire climate change expertise.
This could be a significant opportunity for companies to accelerate transformation from within. As companies seek to embed sustainability across functions, they will need education, capacity building and knowledge sharing, and a tailored strategy for developing the skill sets they need. For example, AB InBev has begun building climate analytics and data science capabilities to support its climate actions, and views social and behavioral science capabilities as the next frontier: engaging suppliers, consumers and communities more deeply on climate in future. In parallel, the company continues to build a “team of teams” with training in the foundations of climate and sustainability.
The sooner you start, the more you learn
Pacesetter companies have learned to apply lessons from previous or parallel projects, as well as across different markets. Those operating globally can take learnings gained in one location and apply them to others. One simple benefit of climate action is gathering initial experience on which to build subsequently.
Leading companies are still learning, reviewing their long-term strategies and revisiting their targets. Successful strategies are rooted in mindsets that prioritize long term value, flexibility and a willingness to continuously improve.
While every company is on an implementation journey, EY Net Zero Center’s 2022 report, “Essential, expensive and evolving: The outlook for carbon credits and offsets (via ey.com Australia),” found that companies that act now will be most likely to achieve ambitious climate and sustainability targets. As technology evolves, regulation tightens, stakeholder pressure increases and competition intensifies, companies that have already started taking comprehensive transformative action will be more resilient and better positioned to capture the value from their climate initiatives.
We’re not there yet
The imperative to act on climate change is urgent. The coming years offer a narrow window during which it is still possible to limit Earth’s temperature rise to 1.5 degrees Celsius.
Companies have a key role to play in this, but they need to think differently about this challenge. They should no longer assume there is a trade-off between financial value and climate initiatives. Rather, they should see climate initiatives as a means of protecting and creating more value for business, society and the planet simultaneously.
Sustainability initiatives deliver financial value in myriad ways. Our survey finds that a clear majority — 69% — of companies are already finding that financial returns on their investments surpass their expectations. They are realizing similarly high levels of value for their customers, employees, and society as well.
Our research also shows that climate action is a journey. As companies take action to address climate change, they build their own capacity, which in turn makes it easier to make further progress.
One key message from these results is: Get started. Companies that have been setting targets, implementing initiatives, advancing their capacity and building resilience for longer are creating more value and struggling less with implementation than those starting out.
Five actions to take
Looking at lessons from those who are leading the charge, as well as acknowledging where they and others still need to improve, we see a number of actions that companies should take in order to create more value from their climate agenda for their stakeholders and for the planet.
- Challenge your level of ambition – Even for the companies included in this survey that have demonstrated commitment to change, we are not seeing ambitious-enough targets to meet the goals set forth in the Paris Agreement.
- Recognize complexity – Driving true impact on emissions reduction is a complex process and requires measurements to track progress and assess ROI from the onset.
- Collaborate – Collaborate both within your sector and across sectors. This is a collective challenge and working with industry and cross-sector groups will accelerate change.
- Influence your supply chain – Many organizations will have the greatest opportunity to influence emissions reduction through their supply chains by engaging and supporting suppliers.
- Invest in talent – Too many companies recognize there is insufficient sustainability talent available to meet the challenge but are not making this a priority. Upskilling across all relevant functions in the organization and attracting specialists can become a source of advantage.
As Cisco CSO Mary de Wysocki said, there is an “opportunity to help customers understand that making sustainable choices can also have a good return on investment.” The same is true for companies across the board. The opportunity to create employee, customer and societal value is great. Companies that use climate action to inform strategic choices, drive innovation and maximize their financial value will become leaders in the coming years.